Senate passes changes for small-business coronavirus relief

WASHINGTON, D.C. — Wednesday afternoon, the Senate passed the bipartisan Paycheck Protection Program Flexibility Act (PPPFA), to make it easier for businesses struggling during the coronavirus pandemic to take advantage of a payroll subsidy program that’s been a central part of Washington’s response to the corresponding economic crisis.

The legislation includes important changes for Hawai‘i businesses and nonprofits that have received loans through the Paycheck Protection Program (PPP).

Specifically, the PPPFA includes changes to provide businesses and nonprofits with additional time to use their PPP loans, and more flexibility to use their loans to cover non-payroll costs like rent and utilities.

The Senate passed the bill by voice vote after a handful of GOP opponents gave way. The measure now heads to President Donald Trump for his expected signature.

Senator Mazie K. Hirono issued the following statement after unanimous Senate passage:

“Earlier today, I had a Zoom call with Hawaii small business owners who, in normal times, would have been in Washington, DC this week to participate in the 7th annual Hawaii on the Hill. On the call, and over the past three months, I’ve heard about how essential the PPP program has been for our local business community, and how the changes Congress was considering would provide additional flexibility in a challenging time. While I had hoped Congress could have passed these changes much sooner as businesses are starting to reach the end of the forgiveness period for the first PPP loans, today’s bipartisan effort improves the PPP program and demonstrates what we can accomplish when we work together. I will continue advocating for programs that support small businesses in Hawaii and across the country during this public health and economic crisis.”

Last week, on Thursday, May 28, the House passed the PPPFA on a broadly bipartisan 417-1 vote. It was briefly held up this week as Republican leaders sought to placate opponents such as Wisconsin GOP Sen. Ron Johnson, according to Associated Press.

The legislation would lower an original requirement that at least 75% of Paycheck Protection Program money be used on payroll costs, reducing that threshold to 60% of the loan. It would also lengthen the period in which PPP money must be used — and still permit businesses to have their loans forgiven — from eight week to 24 weeks.

Critics say the pending measure does nothing to ensure that businesses that don’t necessarily need PPP subsidies are ineligible, among other problems.

“If we’re going to potentially authorize more spending, that program needs to be reformed,” Johnson told reporters. “My main problem with what the House did — and this is what’s in dispute — it basically reauthorized the program through Dec. 31, setting up a massive new infusion into the program without the reforms I think really need to be placed so that people who don’t need it don’t keep getting it. We don’t have an unlimited checkbook.”

But the bill had strong support among both Republicans and Democrats and the backing of powerful business groups, which strengthened the hand of supporters like top Senate Democrat Chuck Schumer, who had failed earlier Wednesday in his own attempt to orchestrate passage. At that time it became clear Johnson’s resolve to block the bill was fading and Schumer and Majority Leader Mitch McConnell, R-Ky., reprised the effort only hours later.

“The impact of this crisis is long lasting, and requires lenient terms. We have all heard from small businesses in our states … that (PPP) needed some changes to make it work for so many small businesses that had been left out or rejected,” Schumer said.

All told, Congress has approved $660 billion for the program in two installments.

Johnson said Republicans are hoping to get top lawmakers to sign onto a nonbinding letter to the program’s overseers seeking to clarify some of the rules governing the program. He did not explain exactly what he’s seeking but said Republican lawmakers are close to agreement on the language of the proposed letter.

As enacted in late March, the Paycheck Protection Program required businesses to spend their loan money within an eight-week window to get the loans forgiven — and effectively turned into outright grants. It also required that three-fourths of the money be spent on payroll as a means of keeping workers linked to their jobs. But small businesses said the rules were too inflexible, especially as the eight-week window to use the taxpayer subsidies is beginning to close for many businesses, many of which are still struggling to fully reopen.

Restaurants in particular were upset that under the law were required to rehire their laid-off workers even though they were either closed or limited to takeout and delivery. Many other business owners feared that they would use up their loan money before being allowed to reopen, and then have to lay off employees again because their business wouldn’t bring in enough revenue to keep paying everyone.

The new measure gives business owners 24 weeks to spend the federal aid — instead of eight as originally designed — and extends the program through the end of the year while also lengthening the maturity date and deferral period of the loans.

Republicans such as Small Business Committee Chairman Marco Rubio of Florida complained that the carefully negotiated bill contains a drafting error that could eliminate loan forgiveness entirely for companies who want to use less than 60% of the money for payroll costs. Under the original PPP legislation, passed in March as part of a massive, about $2 trillion CARES Act, loan forgiveness was prorated according to how badly businesses missed the goal of using 75% to maintain payroll.


Associated Press contributed to this report.


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